What is FTE (Fast Track Exit) Scheme - A Detailed Analysis

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What
is Fast Track Exit (FTE)

Ministry has issued Guidelines for "Fast Track Exit (FTE)
Mode" to give opportunity to the defunct companies to get their names
struck off from the register under Section 560 of the Companies Act, 1956 in
time bound manner. The Guidelines will be implemented with effect from 3rd
July, 2011.

Main
Criteria for making an Application under FTE

There are two main criteria:-

The company applying under FTE should not have
any asset and liability.

The
company should not have commenced any business activity or operation since
incorporation or at least one year must has been passed since last business
activity or operation

Companies
which can apply FTE:

Any company, which
has been identified as dormant by the Ministry of Corporate Affairs, can apply
under FTE. Such companies need not to file Form No. GNL-1 for normalizing.

Any
company, which has not filed its statutory documents i.e. Balance Sheet and
Annual Return for any of the financial year 2006-07, 2007-08, 2008-09 and
2009-10, has been identified as defaulting company. Directors of such companies
are debarred from filing any document till they make the default good. Such
defaulting companies can apply under FTE.

Companies
on which FTE is not applicable

The guidelines does not inter-alia cover:

The listed companies,

Companies that
have been de-listed due to non-compliance of listing agreement or any
other statutory Laws,

Companies
against which prosecution for a non-compoundable offence is pending in
court,

Companies
having outstanding public deposits or secured loan or dues towards banks
and financial institutions or any other Government Departments etc. or
having management dispute or

Company in
respect of which filing of documents have been stayed by court or CLB or
Central

Government or any other competent authority.

*Vanishing company means a company, registered under the
Companies Act, 1956 andlisted with Stock Exchange which, has failed
to file its returns with Registrar of Companies and Stock Exchange for a
consecutive period of two years, and is notmaintaining its registered
office at the address notified with the Registrar.

PROCEDURAL
REQUIREMENTS

Procedure for making application for striking off
the name under FTE are as follows:

The Company
desirous to get its name struck off from the Register shall file an application
in the prescribed Form FTE online with the Registrar.

The form
shall be accompanied with an affidavit, an indemnity bond, statement of account
duly certified by a Chartered Accountant in practice or auditor of the company
and copy of board resolution showing authorization for filing the form.

Fee
for filing Form FTE

Applicant
is required to file an application in the prescribed Form FTE along with
prescribed fee of Rs. 5,000/-

Who
can sign Form FTE?

In
case there are active signatories of the company existing in the MCA21 system,
then the Form shall have to be mandatorily digitally signed by the authorised
signatory of the company.

In case no active signatories are existing in the MCA 21 system, then
a physical copy of the Form duly filled in, shall have to be signed manually by
a director authorised by the Board of Directors of the company and shall be
attached with the Form.

Such
form will be uploaded by the practicing professional (i.e. CA/CS/CWA), who has
certified the form.

In such case, the
application shall be accompanied by certificate from a CA/CS/CWA in whole time
practice along with their membership number, certifying that the applicants are
present directors of the company. In such cases, the applicants shall not be asked
to file Form DIR-12 and DIN Form.

In all cases, certification by a practicing
professional (i.e. CA/CS/CWA) is mandatory

If
Pending Prosecution against the Company

If the pending
prosecutions are only for non-filing of Annual Returns under section 159 and
Balance Sheet under section 220 of the Act, such application may be accepted
provided the applicants have already filed the compounding application.
However, steps for final strike of the name of the company will be taken only
after disposal of compounding application by the competent authority.

How the foreign nationals will get their
Indemnity Bond and Affidavit notarized?

Foreign nationals
and NRIs may get their Indemnity Bond and Affidavit notarized as per their
respective country’s law.

In case any
stakeholder has any objections to the Striking off the name of any company from
the Register, what shall be done in such case

List
of applications filed under FTE will be available on the portal. In case any
stakeholder has any objections to the Striking off the name of any company,
he/she may raise such objection by email/letter with the concerned ROC Office
within 30 days from the date of filing Form FTE by the company.

Attachments
with FTE Form

A duly certified
statements of Account by the chartered Accountant in whole time Practice or
Statutory Auditor of the Company (as per annexure C of the scheme)

Copy of Board
Resolution showing Authorization given for filing this application

Affidavit (to be
given individually by Director(s)

Indemnity Bond

In case of
application not digitally signed by the company representative , copy of
application duly signed by Director, Managing Director or Secretary.

Copy of No
Objection certificate from the concerned administrative ministry/Department/
State Government (in case of Government Company)